Other buyer’s fees
On top of your standard closing costs, there are a few other fees you may have to pay when you purchase your home or condo. Each of these fees is dependent on any number of factors, such as whether or not it’s a brand new home, how your mortgage financing is working out, and if the seller prepaid anything for the year which you may need to reimburse them for. Here is a list of the other fees you may come across:
New home warranty enrolment fee
In most provinces, special insurance providers offer warranties on new builds (including all home types, not just condos) – also known as a new home warranty. The enrolment fee is typically between $500 and $1,000, and it protects buyers from having to pay for any repairs due to builder error. What’s important to keep in mind with the new home warranty enrolment fee is you’ll have to pay for it one of two ways: either with cash upfront or through the purchase price (and therefore your mortgage). Some builders include the fee in their asking price, but others do not. Find out before you buy, so you know if there’s an extra cost coming your way on closing day.
If you can afford to put down 20% or more, you don’t need to purchase mortgage default insurance – well done! Unfortunately, that doesn’t mean your lender won’t still ask you for an appraisal of the property you want to buy. If your lender asks you to commission an appraisal, it means they need someone to confirm the market value of the property is accurate. Some lenders can offer you a list of appraisers they work with, and sometimes you can find one yourself. Either way, an appraisal fee will run you $150 to $500.
Land survey fee
Another thing your lender may ask you for is an up-to-date land survey, and the process is fairly simple: a surveyor will visit the property you want to buy, measure the land and ensure all boundary lines are being followed. Typically, the seller will commission this survey even before listing the home, and pay the fee (around $600 to $900). However, if the seller doesn’t do this and your lender requires the information, you may be stuck with the bill.
It’s easy to get wrapped up in the home buying process – especially when you’re working with large amounts of money. But there’s one step you won’t want to forget: getting your utilities hooked up before moving day. On top of having someone come to hook up your cable and internet, you’ll need to make sure your hydro, gas, oil and/or electricity are ready to go, and some of those come with hook-up fees. Make sure you set aside at least a few hundred dollars, so you’re not surprised by your first set of bills.
Prepaid property taxes
Every year, homeowners across the country have to pay property taxes. Depending on where you live, you can usually choose to pay them monthly, quarterly, twice a year or even for the whole year. If the seller of the home you want to buy has prepaid their property taxes for the entire year, you’ll need to reimburse them a prorated amount, from your closing date to the day they’ve paid up to.
For example, if your closing date is 100 days before the end of the year, you’ll need to pay the seller the amount they prepaid for those 100 days. The calculation is as follows:
$3,000 (property taxes for the year)
÷ 365 (days per year)
= Property taxes per day: $8
$8 (property taxes per day)
x 100 days
= Amount due to seller: $822
This amount will be listed on your Statement of Adjustments, and must be paid for with cash on closing day.
Prepaid condo fees
The same situation outlined above may also be true for condo fees. If the seller has prepaid their condo maintenance fees (also known as strata fees), you will have to reimburse them a prorated amount from the date you take possession to the day they’ve paid up to. This amount will also be listed on your Statement of Adjustments, and will need to be paid for with cash on closing day.
Finally, if the seller is ahead on payments for gas, hydro, oil or water, you’ll also have to pay them back for that. Once again, you’ll find this amount on your Statement of Adjustments, and you must pay the seller with cash on closing day.